Navigating Your IPO Lockup Period
You’ve crossed the finish line — or so it feels. The IPO has gone live, the market has reacted, and your equity compensation has transitioned from hypothetical to tangible. But until your IPO lockup period expires, you’re in a unique in-between zone: technically public, but not yet liquid. What you do during this time can reinforce the smart planning you’ve done so far.
This is the moment to tighten your strategy.
Your 10b5-1 plan matters now
If you’ve already set up a 10b5-1 trading plan, congratulations — you’ve just reduced one of the biggest risks of this stage: emotional decision-making. A properly structured 10b5-1 plan allows you to schedule trades in advance, helping you avoid allegations of insider trading and capitalize on market windows without scrambling during earnings calls or investor meetings.
Your plan will soon activate. Review the mechanics and timing with your advisor and tax team to ensure accuracy. Confirm which broker is executing the trades. If you haven’t set one up yet, this window is rapidly closing.
Prepare for reporting requirements
After the IPO, you may be subject to reporting requirements if you exceed ownership thresholds. Form Schedule 13D is required if you acquire more than 5% of a public company’s shares and intend to be an active investor (e.g., influencing management). And file within five days. If your ownership is passive — meaning no intent to influence the company — you may file Schedule 13G instead.
Additionally, Form 4 applies to corporate insiders and must be filed within two business days of a change in beneficial ownership. These forms are public and monitored closely, so it’s critical to stay in compliance.
Build a liquidity buffer
Your equity may be worth millions, but unless you’ve sold shares or set aside liquidity in advance, your cash flow might still be tight.
Even before you sell a single share, you’ll want to model your post-IPO tax obligations — including any alternative minimum tax (AMT) from incentive stock options or federal and state tax due on RSUs. It’s common for high earners to reserve 30–40% of expected proceeds for taxes. Still, your team can help refine this number based on your residency, filing status, charitable giving strategy, and anticipated income.
Plan now so you’re not caught short later.
Trade carefully: blackout periods still apply
Just because the lockup ends doesn’t mean you’re free to trade anytime. As an insider or significant shareholder, you’ll likely face trading blackout windows, particularly around quarterly earnings announcements or material company events. Your company’s legal or compliance team will publish a trading calendar, and your advisors should keep you aligned with those dates.
If you’ve adopted a 10b5-1 plan, you can continue to sell systematically, even during blackout periods, so long as the plan was adopted when you didn’t possess material nonpublic information.
Give with intention — but carefully
Many HNWIs want to align their IPO success with a philanthropic mission. You must carefully time and structure charitable giving during the IPO window to maximize its impact.
Gifting appreciated stock to a Donor-Advised Fund (DAF) before the lockup may help reduce capital gains taxes and potentially increase your deduction, depending on timing and eligibility. Still, you need to avoid “pre-arranged sale” issues. This is where working with a tax advisor and charitable giving strategist is crucial. The goal is to contribute in a way that aligns with your charitable intent and withstands IRS scrutiny.
From tension to transition
This stage can feel like waiting for the other shoe to drop. But it’s also a moment to refine your readiness. Proper reporting, liquidity planning, and safeguards ensure you’re ready to act when the lockup ends.
The next phase? Thoughtful execution. Now that your equity is liquid, what’s the plan?
This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.
